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Opinions/Editorials Title: Elizabeth Warren’s Social Security Proposal Doesn’t Go Far Enough: It’s Time For A Basic (Retirement) Income Senator and presidential candidate Elizabeth Warren has a new – and expansive – proposal for Social Security. It’s a grab-bag of changes, as seems to be the norm these days, a list that includes the following: So how do you make sense of this? Some of these change seems small-bore – special Social Security benefit provisions for apprenticeship students, for instance. Others are expansive, like the new much higher minimum. What nearly all have in common is the elimination or weakening of the link between benefits and lifetime wages. Canada provides caregiver credits by dropping years from the averaging requirement, so as to retain the link to an individual’s actual work history, but Warren proposes treating individuals as “median earners” for every year in which they can claim part-time caregiving. The surviving-spouse boost further increases benefit levels for couples vs. singles. The WEP elimination ignores a worker’s true employment history. The new tax on high earners purely injects more money into the system without any relationship to benefit accruals. The flat-dollar benefit boost and the new minimum benefit are obviously unrelated to income. And maybe that’s fine - after all, the current system has a benefit formula heavily tilted in favor of low earners as it is. Politicians of various stripes will nonetheless tell their constituents that they earned their benefits fair and square, regardless – as Warren herself says: “Social Security is an earned benefit –– you contribute a portion of your wages to the program over your working career and then you and your family get benefits out of the program when you retire or leave the workforce because of a disability.” But these are all half-measures. If we really want to ensure that Social Security provides benefits to everyone sufficient to meet their basic needs, then the obvious solution is simply a flat “basic income”-like benefit. And at the same time, Warren writes: “For someone who worked their entire adult life at an average wage and retired this year at the age of 66, Social Security will replace just 41% of what they used to make. That’s well short of the 70% many financial advisers recommend for a decent retirement” – suggesting to readers that she thinks that Social Security itself should fill that gap, something that places her well outside mainstream opinion that what’s needed is more attention to plans or programs that help middle-class Americans achieve this for themselves. (Though, for a couple, $1,500 x 12 = $18,000; x 2 = $36,00 which is 70% of $51,000, as another indicator of how high her minimum benefit level is.) What we need, instead, is my comprehensive three-tranche Social Security reform, in which all Americans are kept out of poverty with a flat “basic income” benefit, structures are put into place for second-tranche-income retirement savings and risk-sharing life-income drawdown, and Americans make their own choices on upper-tranche income saving. The concept of income tranches means that no one is expected to save on that portion of their income that is just enough to meet their basic needs – as Andrew Biggs wrote recently at MarketWatch, the lowest earners may be better off not saving for retirement at all – but save only for retirement on that slice of income above this level. The flat benefit means that we can include every American but fund it through an income tax that leaves debates about the “fair share” of rich or poor taxpayers behind. And a second-tranche-income retirement savings program, by incorporating retirement savings into a wholly-redesigned Social Security program, likewise leaves behind debates about “privatization” or “unfair government savings mandates” for something new. Or, on the other hand, maybe not so new.
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#1. To: Willie Green (#0)
You want to "save" Social Security? Stop using it to pay disability. Use the general funds. SSDI has nothing to do with working, or the elderly, or retirement. Yet it's costing Social Security $200 billion per year.
Liberals Are in a highway High speed crash - pile up Low visibiliTy causes accelleraTion Wow They look like suicide car bombers Too Love If you ... don't use exclamation points --- you should't be typeing ! Commas - semicolons - question marks are for girlie boys !
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